Evaluation of Financial Performance of Macy's Inc.

Running head: REPORT 0
foundation of finance
FEBRUARY 9, 2019

REPORT 1
Introduction
The accounting regulating companies of various countries perform the obligations of
the management of a company, to make and represent the financial statements of a company,
which show the true and fair views of company’s affairs. This report is targeted at evaluating
the financial presentation of a corporation Macy’s Inc. (M). This report would make use of
the numerous ratios to assess financial performance of a company over current period. In the
following parts, the financial ratios, reasons for selection of financial ratios, financial
performance of Macy’s Inc. and comparison between financial performance of Macy’s Inc.
and Kohl’s (KSS) is discussed and critically examined.
Financial ratios and reasons of selection of ratios
The ratio analysis refers to the assessment of financial performance of an organization
regarding the numerous bases like efficiency, solvency, liquidity, profitability and market
value ratios (Morningstar, 2017). Ratio analysis provides an idea to investor in respect of
financial position of company. The ratio analysis data of one company can be compared to
data of its competitor company. The study of ratio analysis has made over both corporations.
The ratio’s calculation are given in appendix.
In this report, return on equity and net margin show regarding profitability position of
an entity. Quick and current ratios show regarding liquidity position of an entity. Inventory
holding days and average receivable days show regarding efficiency position of an entity.
The interest times and debt equity ratio show in respect of solvency position of an entity.
Further, market to book ratio and PE ratio state about market value ratios of the company.
The reasons to these ratios are explained as below-
Profitability

REPORT 2
The company’s profitability position can be mainly evaluated by two major ratios like
net profit ratio and return on equity. Profitability ratios are selected to assess an ability of
entity to produce income in comparison of expenses and other cost during specific period.
Solvency
The interest times and debt equity ratios are selected to outhouse the highlight debt-
structure. The long-term shareholders are keen to view characteristics to solvency of
occupation from long-term liveliness as per entity’s view. The Short term solvency position
of the entity show capability of entity to fulfil complete short term financial duties. Solvency
position assesses the capability of entity to ignore the pressure related to short term financial
conditions.
Efficiency
The efficiency ratios are selected for analysing because this ratio assess capability of
entity to make use of sources and assets. The accounts receivable days are number of days the
bill was due before took from the debtor. The inventory days are average number of days,
good or inventories remain before traded.
Liquidity
Liquidity position of entity renders insight of capability of business to pay off short term
debts. The quick and current ratios are considered as main ratios to assess liquidity position
of entity.
Market value ratios
Market value ratios assess current share price of stock of public entity.
These ratios are used by future and current investor to decide whether stakes are under-rated
and over-rated.